Fracking in Great Britain

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Shale and hearty welcome

Dec 8th 2012

THE first recorded encounter with shale gas in Britain did not end well. In 1875 geologists drilling through Palaeozoic rock formations in West Sussex hit gas-bearing shale. The injudicious proximity of a naked flame resulted in a minor explosion. As part of its “gas strategy”, published on December 5th alongside its autumn statement on the economy, the government gave a few details of how Britain might, more than a century later, tap the bountiful natural gas in its shale beds.

The United States has seen an “unconventional” energy boom, based largely on the technology of hydraulic fracturing or “fracking” (used to extract gas from shale), which has made it all but self-sufficient in cheap gas. Other countries with the right geology have looked on jealously. Britain has a better chance than most of replicating the bonanza.

Like America, Britain seems to have plenty of reserves. Cuadrilla, a firm already sinking test wells, says that 20 trillion to 40 trillion cubic feet (tcf) of the stuff could be recovered from under Lancashire alone. This seems optimistic: the Energy Contract Company, a consultancy, reckons only a tenth can be winkled out. But since there are ten such basins in the country it may be that 40tcf is indeed recoverable, roughly equivalent to Britain’s share of the original North Sea gas reserves.

George Osborne, the chancellor of the exchequer, this week revisited the idea of offering tax breaks to attract shale-gas firms. Although Britain already has a well-developed oil-and-gas infrastructure, much of the kit and expertise required for shale developments are still in short supply outside America. But potential investors hoping to hear details of the incentives were disappointed.

If it is serious about shale gas, the government will have to do more. Increasingly vocal protesters complain that fracking pollutes water supplies and causes seismic activity (France has banned it because of public disquiet). Cuadrilla’s drilling was suspended after it seemed to cause a couple of very minor tremors (a subsequent government review concluded that the process is safe if monitored properly; the moratorium is expected to be lifted soon). Mr Osborne plans to create an Office for Unconventional Gas and Oil to simplify the regulatory process, but critics need to be convinced that regulations will be tough and rigorously applied.

Sharing out the spoils might help, too. American property rights allow landowners to profit from the minerals under their feet. In Britain those rights belong to the state, so fewer stand to gain directly. In addition to the promises of jobs and economic activity that shale gas brings, Mr Osborne should consider fiscal arrangements that send some cash back to areas where the gas is extracted to win over locals.

Still, one advantage of following America is that extraction techniques have been refined. Techniques that cut drilling times, boost the amount of gas that can be recovered and enable many wells to be sunk from one location all lessen the environmental impact. Once built, a well consists of a few pipes sticking out of the ground. So keeping operations out of sight of the NIMBYs is feasible—just as western Europe’s biggest onshore oilfield, Wytch Farm, is hidden away in rural Dorset.

Britain’s shale gas may never be as cheap as America’s, but it should be able to compete with imported gas and reduce the country’s reliance on Russia and the Middle East. Even if everything goes right, however, the gas is unlikely to start flowing in commercial quantities for at least five years; nor will production grow as quickly as across the Atlantic or have the same impact on the energy market. British shale gas is set for a slow seep rather than another explosion.

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